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Some Think Expunging BrokerCheck Complaints is Too Easy

February 7, 2017

Clearing complaints from an advisor’s BrokerCheck record may be too easy, The Street writes.

Last month a Finra arbitration panel ruled that former UBS broker Joseph La Ferla, Jr. could erase all 11 customer complaints from his record, the web publication writes. The panel ruled that La Ferla had given credible testimony that he wasn’t involved in the cases that resulted in $647,950 paid out to 11 of his customers from 1987 to 1991, TheStreet.com reports.

La Ferla tells the web publication that the complaints were made by “unhappy clients” who tacked on his name to complaints against his former partner, who had been forced out of the business for violations against their mutual clients, according to the web publication. And according to the Finra panel’s decision in January, two investigative bodies had found that Le Ferla wasn’t engaged in the “same or similar conduct,” TheStreet.com writes.

But several aspects of La Ferla’s request are “unusual,” TheStreet.com writes. That “exculpatory information” presented in last month’s arbitration didn’t stop arbitrators in two cases on La Ferla’s record from directly naming him as partially responsible, according to the publication. In one case, for example, he was ordered to pay $14,170 of a $51,655 award, TheStreet.com writes. La Ferla tells the web publication that in that instance, PaineWebber (which would later become UBS) was footing the legal bills so he didn’t defend himself.

Meanwhile, a Finra spokeswoman tells the publication that multiple expungement requests such as La Ferla’s are “extremely rare” but said the regulator doesn’t comment on specific arbitration panel decisions.

It’s also peculiar that the complaints are so old, according to TheStreet.com, although La Ferla tells the publication that he simply didn’t know he could get rid of the complaints until he set up a new advice firm in 2015.


Craig McCann, an expert witness at Securities Litigation & Consulting Group, tells TheStreet.com that the panel’s decision last month is “the most extreme expungement abuse” he’s ever seen. Just seven out of every 10,000 brokers have as many settlements and awards as La Ferla on their records, according to a report release last year by McCann’s firm and cited by TheStreet.com.

Marnie Lambert, president of the Public Investors Arbitration Bar Association, tells the publication the panel’s decision in favor of La Ferla is “an awful precedent” and could allow more brokers to follow his strategy at the cost of investors.

If a court confirms the award, La Ferla’s record will be completely clean, according to TheStreet.com. If that’s the case La Ferla is likely to start linking to his BrokerCheck profile on the website of his new Garden City, N.Y. advice firm La Ferla Group.

Currently, only two of the four partners have links to BrokerCheck underneath their bios on the webpage, and both have clean records. The other two, who have complaints, do not include links to BrokerCheck, TheStreet.com writes.

By Alex Padalka
  • To read the The Street article cited in this story, click here.